How to Plan When Your Beneficiary is Disabled - Genser Cona Elder Law

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Special Needs Planning: How to Plan When Your Beneficiary is Disabled

A disabled beneficiary, such as one with a developmental disability, requires careful planning. For these types of beneficiaries, a supplemental needs trust can be used to protect their inheritance from compromising government benefits.

There are a couple of different types of supplemental needs trusts:

• The first, called a first party Supplemental Needs Trust, is one created with the beneficiaries own funds, such as from a lawsuit settlement. When the beneficiary passes away, these funds have to be used to pay back government benefits before going to any beneficiaries.

• The second, called a third party supplemental needs trust, is one setup with the funds of a third party, such as an inheritance or a gift. When the beneficiary passes away, these assets do not need to be used to pay back government benefits and can go to the beneficiaries you designate.